Labour/Co-op MPs are campaigning to include credit unions in the government’s plans for the Help to Save scheme. The Co-operative Party sees the project as a “huge opportunity” to further support and expand credit unions.
The new scheme was initially presented in January by former prime minister David Cameron, with the aim of helping people on low incomes build up their savings.
It is estimated that 16.8 million people in the UK have less than £100 in savings. The government is looking to address this issue by providing a 50% bonus on up to £50 monthly savings into a Help to Save account. The scheme will be open to 3.5 million adults in receipt on Universal Credit with minimum weekly household earnings equivalent to 16 hours at the National Living Wage. The bonus will be paid after two years with an option to save for a further two years, enabling people to save up to £2,400 and receive government bonuses worth up to £1,200.
The Co-operative Party highlights that between 2004 and 2014 the credit union sector has more than doubled its membership and trebled deposits. As the Help to Save bill is going through the second reading in the House of Commons, Labour/Co-op MPs are making the case for credit unions to be considered as eligible providers of Help to Save accounts.
Chair of the Co-operative Party, Labour/Co-op MP Gareth Thomas, has asked for credit unions to be able to provide Help to Save financial products alongside commercial banks. “I fail to understand why credit unions cannot be allowed to offer the service to communities,” he said during the debate.
Mr Thomas has also called for legislation to boost saving by making employers obliged to provide a payroll deduction service to their staff. A number of large employers, including local councils and the Ministry of Defence, are offering such services, which enable employees to have money deducted from their pay to go directly into a savings account.
Also speaking at the debate, Labour/Co-op MP Stephen Doughy gave the examples of Canada and Germany as countries with “diversity in savings, and where much stronger credit unions are available to a much wider group of the population”.
The government launched a consultation over the summer inviting suggestions for the implementation and detailed policy design of Help to Save. It also invited financial institutions and civil society organisations with an interest in the scheme to respond to the consultation.
